What is value chain analysis?

Value chain analysis, another Porter framework, breaks a company into the discrete activities that create its product — inbound logistics, operations, marketing, sales, support — and asks where each adds value and at what cost. Advantage comes from performing some activities cheaper or better than competitors do.

Applied to rivals, it explains why they can price or position the way they do: a competitor with a self-serve funnel has a structurally lower cost of sale than one running field sales, and will behave accordingly. Understanding a competitor’s chain predicts their moves better than watching their homepage.